I don’t know enough about the Portuguese economy to say if its recent performance is sustainable, but its experience does remind us of the difference between becoming “more productive”, as Portugal seems to be doing, and becoming “more competitive”, as...
kontrast.at/portugal-econo…
kontrast.at/portugal-econo…
...other European countries also hit by the global crisis have had to do. The former comes about by investing in productivity-enhancing education or technology or in productive infrastructure. The latter can come about either by increasing productivity or by lowering wages...
...relative to production (directly, as Germany did after 2003-05, or indirectly, as China did in the 1990s and 2000s).
Unfortunately it’s been mostly the latter in the past few decades. The problem is that for countries that become competitive by lowering wages, additional...
Unfortunately it’s been mostly the latter in the past few decades. The problem is that for countries that become competitive by lowering wages, additional...
...growth seems to come at the expense of their trade partners (in the form of slower growth or faster-rising debt), mainly because the growth in exports isn’t matched by a growth in imports, and so they subtract net demand from the rest of the world. For countries that become...
...competitive by increasing productivity, additional growth also benefits their trade partners because both exports and imports grow.
Clearly we need to design a global trading system that strongly encourages the latter and penalizes the former, and until we do, opposition...
Clearly we need to design a global trading system that strongly encourages the latter and penalizes the former, and until we do, opposition...
...to free trade can only grow. What’s more, as our upcoming book explains, until we do it will be hard for “globalized” economies to take steps to reverse income inequality because these steps undermine competitiveness, in which case much of their resulting increase in...
